planning commission report regular agenda …pc staff report – 2/24/14 item no. 1 planning...

PC Staff Report – 2/24/14 Item No. 1

PLANNING COMMISSION REPORT Regular Agenda

PC Staff Report 2/24/14 ITEM NO. 1 COMPREHENSIVE PLAN REVIEW OF NINTH AND NEW HAMPSHIRE

PROJECT Consider making a finding, related to a request to use tax increment financing, that the proposed Ninth and New Hampshire Redevelopment District- North Project Area Redevelopment Project Plan is consistent with the comprehensive general plan, Horizon 2020, for the development of the city, as required by K.S.A. 12-1722. STAFF RECOMMENDATION: Staff recommends making a finding that the proposed plan for the redevelopment of the north portion of the Ninth and New Hampshire Project is consistent with the comprehensive general plan, Horizon 2020.

Reason for Request: K.S.A. 12-1772 requires the City of Lawrence, when proposing a tax increment financing (TIF) redevelopment area, to prepare a redevelopment plan in consultation with the Planning Commission of the city and for the planning commission to determine if the redevelopment plan is consistent with the comprehensive general plan. (A complete copy of the K.S.A. 12-1772 is provided in attachment A.) Tax increment financing is an economic development tool that captures the incremental increase in assessed valuation over the pre-development base valuation to pay for certain eligible project costs. The base level of taxes continues to flow to the taxing jurisdictions. In this case, eligible project costs include construction of the parking garage, infrastructure expenses, and interest costs. KEY POINTS Planning Commission’s scope is limited to the conformance of the proposed project plan with

the comprehensive plan, Horizon 2020. There are several relevant factors in Horizon 2020 which would be consistent with the

proposed project plan. The redevelopment district includes a north and south area. The project plan for the south

portion of the redevelopment district was approved in 2012 and the Planning Commission found the south plan to be in conformance with the comprehensive plan.

ASSOCIATED CASES/OTHER ACTION REQUIRED None

PLANS AND STUDIES REQURIED Ninth and New Hampshire Redevelopment District - North Project Area Redevelopment

Project Plan ATTACHMENTS K.S.A. 12-1772


Ninth and New Hampshire Redevelopment District- North Project Area Redevelopment Project Plan

PUBLIC COMMENT RECEIVED PRIOR TO PRINTING None

Project Summary: The subject property at 100 E. 9th Street, on the northeast corner of 9th and New Hampshire, includes an existing commercial building. It is proposed that the existing building be razed and a mixed-use commercial building, including apartments and underground parking, be constructed on the site. The scope of review by the Lawrence/Douglas County Planning Commission is limited to determining if the proposed redevelopment project, the Ninth and New Hampshire Redevelopment District - North Project Area Redevelopment Project Plan is consistent with the goals and policies established in Horizon 2020. While the redevelopment plan includes proposed site plan elevation drawings, this information is provided only to assist the Planning Commission with understanding the redevelopment project. 1. CONFORMANCE WITH THE COMPREHENSIVE PLAN The Horizon 2020 designation is implemented through the Commercial District (CD) zoning district, as well as the Downtown Urban Conservation Overlay District and its accompanying Downtown Design Guidelines. The proposed redevelopment plan conforms in use and standards to these districts. Horizon 2020 identifies this property as office and/or commercial uses in Figure 3-2, Future Land Use Map. The following items relevant for the Planning Commission’s consideration of this item:

1. Preserve downtown as a Mixed Use Activity Center Support downtown Lawrence as the Regional Retail/Commercial/Office/Cultural Center with associated residential uses through the careful analysis of the number, scale, and location of other mixed-use commercial/retail developments in the community. Downtown Lawrence is the cultural and historical center for the community and shall be actively maintained through implementation of the adopted design guidelines that regulate the architectural and urban design character of this regional center. (p. 6.1)

2. Encourage infill development with an emphasis on Downtown Lawrence Encourage infill development and/or redevelopment of existing commercial areas with an emphasis on Downtown Lawrence and existing commercial gateways. Sensitivity in the form of site layout and design considerations shall be given to important architectural or historical elements in the review of development proposals. (p. 6.1)

Staff Finding: The redevelopment plan conforms to the adopted zoning for the area and is generally consistent with the policies for Downtown established in Horizon 2020.


2. PROFESSIONAL STAFF RECOMMENDATION Staff recommends making a finding that the proposed Ninth and New Hampshire Redevelopment District- North Project Area Redevelopment Project Plan is consistent with the comprehensive general plan, Horizon 2020, for the development of the city, as required by K.S.A. 12-1722.

12-1772. Procedure for establishing a redevelopment project or bioscience development project;project plan; hearing; posthearing changes. (a) Redevelopment projects. One or more redevelopment projectsor bioscience development projects may be undertaken by a city within an established redevelopment district orbioscience development district. Any such project plan may be implemented in separate development stages. Anycity proposing to undertake a redevelopment project or bioscience development project within a redevelopmentdistrict or bioscience development district established pursuant to K.S.A. 12-1771, and amendments thereto, shallprepare a project plan in consultation with the planning commission of the city and, in the case of a biosciencedevelopment district, with the approval of the bioscience authority. The project plan shall include:

(1) A summary of the feasibility study done as defined in K.S.A. 12-1770a, and amendments thereto, whichwill be an open record;

(2) a reference to the district plan established under K.S.A. 12-1771, and amendments thereto, that identifiesthe redevelopment or bioscience development project area that is set forth in the project plan that is beingconsidered;

(3) a description and map of the redevelopment or bioscience development project area to be redeveloped;(4) the relocation assistance plan required by K.S.A. 12-1777, and amendments thereto;(5) a detailed description of the buildings and facilities proposed to be constructed or improved in such area;

and(6) any other information the governing body deems necessary to advise the public of the intent of the project

plan.(b) Resolution requirements. A copy of the redevelopment project plan or bioscience development project plan

shall be delivered to the board of county commissioners of the county and the board of education of any schooldistrict levying taxes on property within the proposed redevelopment project area or bioscience developmentproject area. Upon a finding by the planning commission that the project plan is consistent with the intent of thecomprehensive plan for the development of the city, the governing body of the city shall adopt a resolution statingthat the city is considering the adoption of the project plan. Such resolution shall:

(1) Give notice that a public hearing will be held to consider the adoption of the redevelopment project plan orbioscience development project plan and fix the date, hour and place of such public hearing;

(2) describe the boundaries of the redevelopment district or bioscience development district within which theredevelopment or bioscience development project will be located and the date of establishment of such district;

(3) describe the boundaries of the area proposed to be included within the redevelopment project area orbioscience development project area; and

(4) state that the project plan, including a summary of the feasibility study, relocation assistance plan andfinancial guarantees of the prospective developer and a description and map of the area to be redeveloped ordeveloped are available for inspection during regular office hours in the office of the city clerk.

Except as provided in paragraph (3) of subsection (b) of K.S.A. 12-1774, and amendments thereto, if thegoverning body determines that it may issue full faith and credit tax increment bonds to finance the redevelopmentproject or bioscience development project, in whole or in part, the resolution also shall include notice thereof.

(c) (1) Hearing. The date fixed for the public hearing shall be not less than 30 nor more than 70 days followingthe date of the adoption of the resolution fixing the date of the hearing.

(2) A copy of the resolution providing for the public hearing shall be by certified mail, return receipt requested,sent to the board of county commissioners of the county and the board of education of any school district levyingtaxes on property within the proposed redevelopment project area or bioscience development district project area.If the project is a bioscience development project, a copy of the resolution providing for the public hearing shallalso be sent by certified mail, return receipt requested, to the Kansas development finance authority. Copies alsoshall be sent by certified mail, return receipt requested to each owner and occupant of land within the proposedredevelopment project area or bioscience development project area not more than 10 days following the date ofthe adoption of the resolution. The resolution shall be published once in the official city newspaper not less thanone week nor more than two weeks preceding the date fixed for the public hearing. A sketch clearly delineating thearea in sufficient detail to advise the reader of the particular land proposed to be included within the project areashall be published with the resolution.

(3) At the public hearing, a representative of the city shall present the city's proposed project plan. If thehearing is for a proposed bioscience development project, a representative of the Kansas bioscience authority shallassist in presenting the proposed bioscience project plan. Following the presentation of the project plan, allinterested persons shall be given an opportunity to be heard. The governing body for good cause shown may recesssuch hearing to a time and date certain, which shall be fixed in the presence of persons in attendance at thehearing.

(d) The public hearing records and feasibility study shall be subject to the open records act, K.S.A. 45-215, andamendments thereto.

(e) Posthearing procedure. Following the public hearing, the governing body may adopt the project plan byordinance passed upon a 2/3 vote and, in the case of a bioscience project plan, with the approval of the bioscienceauthority.

(f) Any substantial changes as defined in K.S.A. 12-1770a, and amendments thereto, to the project plan asadopted shall be subject to a public hearing following publication of notice thereof at least twice in the official citynewspaper.

(g) Any project shall be completed within 20 years from the date of the approval of the project plan.(h) A bioscience development project may be undertaken in a bioscience development district in the

unincorporated area of a county by resolution of the board of county commissioners governing the area if:(1) The bioscience development project is approved by the Kansas bioscience authority; and(2) the board of county commissioners follows the notice, hearing and approval procedures required of a city

to establish a bioscience development project.(i) When establishing a bioscience development project as described in subsection (h), any references to

"city" contained in this section shall mean "county."History: L. 1976, ch. 69, § 3; L. 1979, ch. 52, § 3; L. 1981, ch. 173, § 26; L. 1982, ch. 75, § 8; L. 1984, ch. 74, § 3;

L. 1988, ch. 78, § 3; L. 2001, ch. 103, § 7; L. 2004, ch. 112, § 27; L. 2005, ch. 132, § 4; Apr. 21.

Summary of Exhibits

Exhibit A: Resolutions No. 6967 and 6968 (Public Notice of Hearing and Recognition that

Project is located in Enterprise Zone) Exhibit B: Illustration of TIF District Area Exhibit C: Ordinance No. 8728 (Removal of South Project Area from Existing TIF District) Exhibit D: Ordinance No. 8768 (Approval of Formation of New Ninth & New Hampshire

TIF District) Exhibit E: Illustration and Description of TIF Project Buildings and Structures Exhibit F: Map and Legal Description of North Project Area Exhibit G: Pre-Design Public and Private Infrastructure Construction Cost Estimates Exhibit H: Feasibility Study Exhibit I: Douglas County Resolution Committing Sales Tax Increment for County Sales

Tax Share Exhibit J: Letter from Springsted Incorporated summarizing updates to Feasibility Study

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North Project Area Redevelopment Project Plan

This Redevelopment Project Plan (the “Plan”) is the “redevelopment project plan” required by K.S.A. 12-1772(a) for the Ninth & New Hampshire Redevelopment District (the “TIF District”). The District contains two separate project areas, the South Project Area ( the “South Project Area”) and the North Project Area. This Plan pertains to the North Project Area. The redevelopment project for the North Project Area (the “North Project”) consists of a one hundred fourteen unit apartment complex, retail and office space, a drive-through banking facility, and underground parking garage, located at the northeast corner of Ninth & New Hampshire in downtown Lawrence, Kansas.

This Plan describes how the North Project will utilize tax increment financing (“TIF”) to finance or reimburse “redevelopment project costs” incurred during the redevelopment of the North Project, as such costs are defined in K.S.A. 12-1770 et seq. (the “TIF Act”). This Plan is intended to be the basis for a redevelopment agreement (the “Redevelopment Agreement”) between the 100 East 9th Street, LLC, the Developer of the North Project ( the “Developer”) and the City of Lawrence, Kansas (the “City”) for the North Project. I. PROCEDURAL HISTORY AND GENERAL INFORMATION On March 13, 2012, the City and 900 New Hampshire, LLC, the developer for the South Project, executed a Funding Agreement between 900 New Hampshire, LLC, and the City of Lawrence to finance the costs of a feasibility study and the City’s attorney’s fees.

On June 19, 2012, the City Commission approved Resolution 6967 (the “Resolution”), which scheduled a public hearing on July 24, 2012 to consider the formation of a TIF District for the Project Area, defined below. At this same meeting, the City Commission also approved Resolution 6968 making a finding that the proposed redevelopment district lies within an Enterprise Zone. A copy of both Resolutions are attached to and incorporated in this plan as Exhibit A. The Resolutions were published as required by the TIF Act. The TIF District is an area generally bounded on the south by 10th Street, on the west by New Hampshire Street, on the east by the alleyway the runs in between the block between New Hampshire Street and Rhode Island Street, and on the north by the boundary between the City owned parking lot located mid-block between New Hampshire Street and Rhode Island Street. There is a small portion of the new TIF District located to the east of the alleyway that runs north and south, and a small portion of the TIF District that runs north of the City owned parking lot that is an area owned by the City but which water line improvements may be required to be made. A map of the proposed TIF district is attached as Exhibit B. As noted above, the TIF District is further divided into the “South Project Area” and the “North Project Area.” The two project areas are generally divided north and south by Ninth Street. The South Project and North Project Areas are shown on the attached map (Exhibit B).

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The South Project Area was previously located in an existing TIF District formed as part of the Downtown 2000 TIF District. The Downtown 2000 TIF District was established by Ordinance No. 7127 and adopted on August 3, 1999. In accordance with Kansas statues K.S.A. 12-1770 et. seq. (the “Act”), the City is authorized to establish redevelopment districts within a defined area of the City. In accordance with this same Act, the City is authorized to remove an area from an existing district. On June 26, 2012, the City approved on first reading an ordinance, Number 8728, to remove the South Project Area from the existing TIF District. A copy of the ordinance approving the removal of the South Project Area from the existing TIF District is attached as Exhibit C. On July 24, 2012, the City Commission held and closed a public hearing to consider the formation of the TIF District. The Ordinance was passed on second reading on August 7, 2012. The term “TIF District” refers to the real property generally shown on Exhibit B, and as legally described in the Ordinance. The Ordinance is attached to and incorporated in this Plan as Exhibit D. The Ordinance included a description of the district plan and found that the TIF District was an eligible area, all in accordance with the TIF Act. On August 29, 2012, the Douglas County Commission approved Resolution 12-33 to commit its share of the County-wide sales tax increment. This resolution is included at Exhibit I. II. PROJECT BUILDINGS, FACILITIES, AND IMPROVEMENTS The “North Project Area” consists of all improvements generally described below and illustrated in Exhibit E, attached to and, by reference, incorporated in this Plan. The North Project area consists of the future site of apartment, related mixed-use structure, and the public right-of-ways along portions of New Hampshire Street. Each of the above-referenced properties and right-of-ways will be improved in some manner in connection with the Project. A map and legal description of the North Project Area is attached hereto as Exhibit F.

A. Buildings and Structures. The new building will be a multi-use structure consisting of approximately one hundred and fourteen apartments, office and apartment clubhouse space on the ground floor, and a drive-through banking facility. The structure will consist of approximately 200,802 gross square feet, including the underground parking garage space. In addition to street parking, the Project also includes an underground parking structure facility consisting of approximately 100 parking spaces. The underground parking structure and related site improvements will cost approximately $5.6 million. Although the Developer projects that the ground floor space will be used for the bank drive-through facility, apartment clubhouse, and office uses, it is possible (but unlikely) that some of the office uses might be later converted to retail uses, and generate some retail sales tax

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for the TIF District. Thus, the Project has been included in the TIF District but no retail sales have been projected to be generated by the North Project in the analysis prepared by Springsted Incorporated (discussed below).

B. Infrastructure Improvements. The North Project will also include various public infrastructure improvements. The following are the planned public infrastructure improvements to be constructed in connection with the North Project, as described on the preliminary cost estimates attached to and, by reference, incorporated in this Plan as Exhibit G:

• Alleyway improvements in the alley located between New Hampshire Street and Rhode Island Street;

• Reconfiguration of the parking spaces located along New Hampshire Street to create angled parking spaces;

• Sidewalk and pedestrian crossing improvements along Ninth Street; • Grading and site preparation within the public right of way • Landscaping and plantings, benches, lighting, decorations, and similar

amenities; • Public restrooms for the Farmer’s market use; and • Water and sanitary and storm improvements.

C. Construction of Project Improvements. The construction of the public and private infrastructure improvements described above

will occur simultaneously with the construction of the North Project. Consequently, there must be close cooperation and coordination between the construction of those improvements, especially with respect to timing and the efficient use of machinery on-site. The Developer will finance and construct the public and private improvements, subject to normal city approval and specifications as part of the construction. Occupancy of the apartments and mixed-use project shall not occur until substantial completion of the public improvements.

III. SUMMARY OF NORTH NINTH STREET FEASIBILITY STUDY

Pursuant to the Funding Agreement approved by the City Commission and dated March 13, 2012, the City retained Springsted Incorporated to perform the feasibility study required by the TIF Act. A copy of the North Project Mixed Use Development Need for Assistance Analysis dated June 26, 2012 (the “Feasibility Study”) is attached to and, by reference, incorporated in this Plan as Exhibit H. The Feasibility Study concludes that the North Project without assistance is not feasible, and would not be undertaken without the requested assistance. This TIF District is anticipated to be a “pay as you go” TIF District with the Developer paying upfront all infrastructure costs related to the North Project.

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V. PROPOSED FINANCING METHODS

Tax increment financing will be used to finance or reimburse redevelopment project costs as follows:

1. Subject to the TIF Cap described in paragraph 5 below, actual site improvement costs and

parking structure costs will be eligible for reimbursement to the fullest extent permitted by Kansas law. The TIF Cap does not include interest. However, interest is agreed to be repaid at the Actual Rate of Borrowed Funds (as defined below) but no more than the WSJ Prime Rate plus 3% as published at the time of the Redevelopment Agreement or the time permanent financing is in place as long as that is within two years of the signing of the Redevelopment Agreement, The “Actual Rate of Borrowed Funds” means the interest rate being paid by the Developer on its industrial revenue bond obligation for the North Project, or if refinanced or financed by other means, its first mortgage loan obligation for the North Project. The Actual Rate of Borrowed Funds shall be submitted by the Developer to the City in the form of an affidavit from the Developer.

2. The following funds will be collected for a period of twenty (20) years from the date the

ordinance approving the Plan is published in the official City newspaper and held in accordance with the TIF Act:

a. All incremental real property taxes assessed in the North Project Area during the term of the North Project;

b. All incremental real property taxes assessed on the remaining portions of the TIF

District, to the extent the increases in real property taxes are caused by the improvements described in this Plan or other activities that do not constitute a new project;

c. Any increases in real property taxes caused by a new project will not be included

in the TIF fund without the City’s approval; and

d. All City and County sales taxes paid in the TIF District during the term of the North Project (although as noted above the Developer does not anticipate retail users in the first floor of the building, and does not anticipate that any retail sales will be generated by the North Project).

3. The Developer has elected to utilize the direct reimbursement method, and will privately

finance all public and private improvements described in this Plan. 4. The City shall have the right to inspect such public improvements for compliance with

the City Code, etc. 5. To the extent that the TIF Fund has available tax increment, the City shall reimburse all

of the Developer’s eligible expenses until all such expenses have been reimbursed, or

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twenty (20) years, whichever first occurs. Notwithstanding the previous sentence, there shall be a limitation on the reimbursement of the Developer’s eligible expenditures (the “TIF Cap”), as follows;

6. Except to reimburse the City’s expenses as described in paragraph 7., below, all tax

increment shall be available to reimburse up to $4,750,000 of the Developer’s redevelopment project costs (the “Cap Amount”). The Cap Amount shall not include interest costs that the Developer is also entitled to recover. The method of reimbursement of interest is more fully described in paragraph V. 1 and the Redevelopment Agreement.

7. Eligible expenses incurred by the Developer prior to the formation of the District shall be

eligible for reimbursement. 8. The City will be entitled to reimbursement for all of the City’s actual and adequately

documented expenses, including the City’s reasonable attorneys’ fees. Such fees shall be excluded from the TIF Cap.

9. The Developer will be entitled to reimbursement for all of the Developer’s actual and

adequately documented expenses, including the Developer’s reasonable attorneys’ fees, as outlined in this plan.

All revenues from an additional one percent (1%) sales tax charged by the North Project pursuant to a Transportation Development District (the “TDD”) affecting a portion of the North Project Area will be held in the appropriate account in accordance with K.S.A. 12- 17,140 et seq (as noted above, at this time the Developer does not anticipate that there will be retail uses on the first floor, and accordingly does not anticipate that there will be any additional retail sales taxes generated by the North Project).

VI. RELOCATION PLAN

Since the developer and related entities own all of the property in the North Project Area, no relocation will be necessary in connection with the North Project.

VII. CONCLUSION

The North Project will create approximately 200,802 square feet of new development in Lawrence, which will generate primarily increased real estate taxes during the twenty (20) year lifespan of the North Project. There will be approximately $5.6 million in redevelopment project costs (TIF), not including interest, required to construct the North Project. Direct reimbursement from the TIF fund will reimburse redevelopment project costs to the extent tax increment is available, subject to the TIF Cap of $4.75 million plus interest, specified in paragraph V.6. The balance of any unpaid redevelopment project costs associated with the North Project will be paid for by Developer.

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UPPER PARKING89'-0"

LOWER PARKING79'-8"

80 ROOF172'-0"

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POOL LEVEL165'-0"

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UPPER PARKING89'-0"

LOWER PARKING79'-8"

80 ROOF172'-0"

POOL LEVEL165'-0"

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Elevation Key Notes: 1 4" FACE BRICK, COLOR 1 2 4" FACE BRICK, COLOR 2 3 CUT LIMESTONE - FIELD 4 CUT LIMESTONE - ACCENT 5 LIMESTONE HEAD/BAND 6 MTL. PANEL 7 MTL. PANEL TRIM PIECE 8 1" INSULATED GLASS / ALUMINUM

STOREFRONT SYSTEM 9 GLASS CANOPY w/ PTD. ALUM.

FRAMES10 FABRIC AWNING w/ PTD. ALUM.

FRAMES11 POWDER COATED STEEL CANOPY12 POWDER COATED ORNAMENTAL

STEEL GUARD RAIL13 LIGHT FIXTURE14 EIFS OR PAINTED MURAL15 CONTROL JOINT16 PREFINISHED METAL CORNICE17 BRICK SOLDIER COURSE18 NICHIHA RAINSCREEN SYSTEM19 NICHIHA TRIM PIECE20 GLASS GUARD RAIL21 PREFINISHED MTL. DOWNSPOUT &

GUTTERS22 PREFINISHED MTL. COPING CAP23 14' x 7' TALL OVERHEAD ALUMINUM

DOOR W/ TEMPERED GLASSPANELS

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WINDOW TYPES

23

EXHIBIT F: MAP AND LEGAL DESCRIPTION OF NORTH PROJECT AREA

North project area legal description:

Lots 60, 62, 64, 66, and 68 New Hampshire Street, and Lot 61 Rhode Island Street, City of Lawrence, Douglas County, Kansas and adjacent right-of-way of alley to the east, and adjacent right-of-way of New Hampshire Street to the west and extending north from northern boundary of the project area through the 8th Street intersection.

24

Item # Description Exhibit G (Est Amount)General Conditions $302,408.40Less: General Conditions allocted to Site Improvement costs $74,900.00

Net General Conditions Cost Allocated to Parking Garage $227,508.40

2 Underground Concrete Structure $2,283,401.003 Excavation $658,450.004 (2) Overhead Doors w/Access Control System $30,000.005 Electrical Distribution to Space $71,007.006 Heat/Vent $238,753.357 Steel Beams/Stairs/Misc. $0.008 Elevator/Stops - 3 elevators $50,000.009 Dry Sprinkler system $0.0010 Parking Garage Signage $5,000.0011 Sealant and Caulking $65,000.00 Subtotal $3,629,119.75

12 2% Cont. $72,582.4013 5% OH&P $181,455.9914 5% Arch. $181,455.9915 Engineering $0.00

Sub-total - Parking Garage Costs $4,064,614.12

Line # Description Exhibit G (Est Amount)16 Permit Cost $40,000.0017 Bond Costs $8,500.0018 Insurance $1,750.0019 Project Manager $1,500.0020 Superintendent $4,750.0021 Assistant Superintendent $3,000.0022 Dumpsters $5,000.0023 Job Site Sign $2,500.0024 Layout $7,900.00

Sub-total - General Conditions $74,900.00

25 Street Lights $0.0026 Landscaping $20,000.0027 Paving $39,660.0028 Site Utilities - includes water main est. $254,500.0029 Safety - Barricades and Traffic Control $17,000.00

30 Fencing $20,000.00

31 Equipment $0.0032 Engineering $10,000.0033 Phase II $1,500.0034 Westar Fees $90,000.0035 Wastewater Fees (1.5", 1.5", 1.5", 2",3") $70,000.0036 Meter Fees, (1.5", 1.5", 1.5", 2",3") $35,000.00

37 Shoring $532,000.00

38 Ninth and New Hampshire Intersection Improvements $105,000.00 Subtotal $1,269,560.00

39 2% Cont. $25,391.2040 5% OH&P $63,478.0041 5% Arch. $63,478.00 Sub-total - Site Improvements $1,421,907.20

Line # Description Exhibit G (Est Amount)42 Professional Services (Legal, feasibility study, etc.) $150,000.00

Total Parking Costs (from above) $4,064,614.12Total Site Improvement Costs (from above) $1,421,907.20Professional Services (from above) $150,000.00

TOTAL $5,636,521.32

Parking Garage Expenses

Site Improvement Expenses

1

Professional Services Expenses

25

Redevelopment Project Financial Feasibility Study

For the 9th and New Hampshire Redevelopment District

City of Lawrence, Kansas

Final June 27, 2012

26

dstoddard

Typewritten Text

Exhibit H

dstoddard

Typewritten Text

1 OVERVIEW ........................................................................................ 1

2 GENERAL DESCRIPTION OF TAX INCREMENT ....................................... 4

3 PROJECT DESCRIPTIONS ................................................................... 5

4 PROJECTED REVENUES (BENEFITS) .................................................... 7

5 PROJECTED EXPENDITURES (COSTS)................................................ 10

6 CONCLUSIONS ................................................................................ 12

EXHIBIT I............................................................................................... 14

EXHIBIT II ................................................................................................................... 15

EXHIBIT III ............................................................................................. 23

Mission Statement

Springsted provides high quality, independent financial

and management advisory services to public

and non-profit organizations, and works with them

in the long-term process of building their communities

on a fiscally sound and well-managed basis.

Table of Contents

27

Overview 1

City of Lawrence, Kansas. 9th and New Hampshire TIF Fiancial Feasibility Study.

1. Overview Statutory Basis and Process Sections 12-1770 through 12-1780 of the Kansas Statutes ("the Act") provide a means for cities to finance public development and redevelopment costs with incremental real estate taxes and other revenues. The purpose of the Act is to "promote, stimulate and develop the general and economic welfare of the State of Kansas and its communities and to assist in the development and redevelopment of eligible areas within and without a city thereby promoting the general welfare of the citizens of this state…” A city may exercise the powers conferred under the Act provided that the governing body of the city has adopted a resolution finding that the specific area sought to be developed or redeveloped is an “eligible area” under the Act. In addition, the city must find that the conservation, development or redevelopment of such an area is necessary to promote the general economic welfare of the city. The proposed redevelopment district boundaries are irregular and extend along the east side of New Hampshire Street from East 10thth Street on the South to 8th Street on the North. A map of the redevelopment district is attached hereto as Exhibit I. The district plan for the proposed redevelopment district provides for the redevelopment district to include two project areas, the North and South project areas, which are depicted on the map attached hereto as Exhibit I, the two projects fully encompass the boundaries of the Redevelopment District. Proposed for development in the South Project Area, is the construction of a four-story mixed-use hotel, commercial, and apartment building with corresponding site improvements, and an underground parking structure. The building is proposed to include approximately 81-hotel units, 8 apartments, and 7,021 square feet of first floor retail space, and a 4,578 square foot restaurant located on the building’s roof. The related site improvement costs include; street lights, landscaping, paving, site utilities and utility fees associated with the development. The underground parking structure is proposed to include approximately 114 spaces. Proposed for development in the North Project Area, is the construction of a seven-story mixed-use commercial and apartment building, with corresponding site improvements, and an underground parking structure. The building is proposed to include approximately 114 rental apartment units, 11,500 square feet of commercial/retail space, and an 11,000 square foot clubhouse space. Site improvements are proposed to be completed in conjunction with the development, though the specific costs are estimates at this point in time. The underground parking structure is proposed to include approximately 120 parking spaces.

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Overview 2


On October 2, 2012, the governing body will open the Public Hearing to receive comment regarding the establishment of the Redevelopment District ("the District," see Exhibit I), adoption of the Ordinance No.___ occurred on ___________. The general comprehensive plan for the District identifies the potential redevelopment project areas located within the District and the suitability of each such area for redevelopment (see below). One or more redevelopment projects may be undertaken within each district. The Act requires all projects to be completed within 20 years from the date of the approval of a project plan, with the exception of environmental investigation and remediation projects which must be completed within 20 years from the date the City enters into a consent decree with the Kansas Department of Health and Environment or the U.S. Environmental Protection Agency. For each redevelopment project undertaken within the District, a project plan ("the Project Plan") must be prepared in consultation with the City-County Planning Commission. The Project Plan must include the following:

1. A summary or copy of the Financial Feasibility Study (this document). 2. A reference to the District Plan for the District. 3. A description and map of the area to be redeveloped. 4. The Relocation Assistance Plan. 5. A detailed description of all buildings and facilities proposed to be

constructed or improved. 6. Any other information the City deems necessary to advise the general

public of the intent of the Project Plan.

The Feasibility Study The Financial Feasibility Study will show that a) the Project’s benefits, tax increment revenue, and other available revenues under K.S.A. 12-1774(a)(1) are expected to exceed or be sufficient to pay for all Project costs as defined by K.S.A. 12-1773, including the payment of principal and interest of debt used to finance the redevelopment project; and b) the effect, if any, the redevelopment project costs will have on any outstanding special obligation bonds payable from the revenues described in K.S.A. 12-1774(a)(1)(D). The City is currently considering the establishment of two projects, the South Project Area and the North Project Area (“the Projects”, see Exhibit I). Establishment of the Projects is being considered to reimburse the Developer for eligible costs associated with the redevelopment of the South Project Area into a mixed-use hotel, apartment, and commercial building, and the redevelopment of the North Project Area into a mixed-use apartment and commercial building. The Developer is requesting reimbursement for eligible costs associated with site improvements and underground parking structures, for both Project Areas.

29

Overview 3


The Developer has requested that the City provide tax increment financing (TIF) assistance through pay-as-you-go financing for both Project Areas. The City will determine the total size of the financing based solely on the property and sales tax increment generated by the Projects (property and sales tax increment and inflationary property tax increment from properties within each of the Redevelopment Project boundaries). In a separate but related matter, the Developer has also requested City authorization to establish a Transportation Development District to assist in financing the construction of the underground parking garage in the South Project Area through a specially levied sales tax. The boundaries of the proposed Transportation Development District will be only those occupied by the South project.

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General Description of Tax Increment 4


2. General Description of Tax Increment Tax increment financing for the Project will use both property and sales tax revenues. Tax increment financing involves the creation of an increment (increase over a base value) in the real estate taxes that are generated from a defined geographic area of a community. Upon establishment of a redevelopment district, the total assessed valuation of all taxable real estate within the district is determined. This valuation is referred to as the district's "Base Year Assessed Valuation." Property taxes attributable to the district's Base Year Assessed Valuation are annually collected and distributed by the county treasurer to the appropriate city, county, school district and all other applicable taxing jurisdictions in the same manner as other property taxes. As new development occurs within the redevelopment district, the total assessed valuation of the district in any given year will presumably exceed its Base Year Assessed Valuation. Tax increment means that amount of real property taxes collected from real property located within the redevelopment district that is in excess of the amount of real property taxes which is collected from the base year assessed valuation. All tax increment is collected by the county and distributed to the city to be deposited in a “special fund.” Tax increment funds may only be used to pay for specified eligible project costs, including principal and interest on debt used, in whole or in part, to finance projects within a redevelopment district. Such debt includes notes, special obligation bonds, full faith and credit tax increment bonds, and other debt instruments. Tax increment also may be paid to a developer/owner over time as reimbursement for eligible costs incurred up-front. This payment mechanism is commonly referred to as pay-as-you-go financing and may include not only the principal amount of such costs but also all or a portion of the interest accrued thereon. The City is responsible for determining the amount of sales taxes allocated to the Projects each year based on the Redevelopment Plan. The City intends to capture all sales taxes generated by the taxpayers doing business within the boundaries of the South Project Area attributable to the taxes levied by the City and the County. The City does not anticipate any additional sales taxes generated by properties within the North Project Area. If a substantial change occurs to the properties, additional unforeseen revenues may be generated.

31

Project Description 5


3. Project Descriptions The South Project: The 900 New Hampshire project (the “South Project Area”) consists of 3 parcels of land located largely on the east side of New Hampshire Street, between East 9th Street and East 10th Street. The north parcel (900 New Hampshire), located on the southeast corner of E. 9th Street and New Hampshire Street, is proposed to be redeveloped into a mixed-use hotel, apartment and commercial project. This parcel is classified as commercial and has a statutory property classification rate of 25.0%. The developer has ownership of the site and will demolish any existing structures for the redevelopment. The two additional parcels in the project are both exempt from taxation, with one parcel owned by the City, and the other by a non-profit entity. These parcels are included to allow for the funding of City expenses related to the potential acquisition of the non-profit owned parcel and the expansion of the existing City Arts Center. These parcels are projected to remain exempt from taxation for the duration of the proposed TIF District. The total Base Year Assessed Valuation of the South Project Area as assessed in 2012 for taxes payable in 2012/2013, is estimated at $62,227, based on the 2012 assessment (see Exhibit II for individual parcel details). Based on development plans provided by the Developer, Springsted has estimated the South Project’s total fair market value upon completion in 2014 (assessed January 1, 2015) at $6,870,042, and the total assessed value at $1,567,540. The property tax increment generated in any given year will be determined by the South Project’s increase in Current Assessed Valuation over its Base Year Assessed Valuation (value as of January 1, 2012). Based on projected sales activity provided by the Developer, Springsted has estimated the South Project’s total taxable sales at $5,047,966 by 2015. The sales tax increment generated in any given year will be determined by the City and be equal to the amount generated by the taxpayers doing business within the boundaries of the South Project Area.

32

Project Description 6


The North Project: The North project (the “North Project Area”) consists of 2 parcels of land located largely on the east side of New Hampshire Street, between East 8th Street and East 9th Street. The two parcels, located on the northeast corner of E. 9th Street and New Hampshire Street, are proposed to be redeveloped into a mixed-use apartment and commercial project. These parcels are classified as commercial and have a statutory property classification rate of 25.0%. The developer has ownership of the site and will demolish any existing structures for the redevelopment. The total Base Year Assessed Valuation of the North Project Area as assessed in 2013 for taxes payable in 2013/2014, is estimated at $250,000 (see Exhibit II for individual parcel details). While the Developer has purchased the two parcels in the North Project Area, at the time of the most recent assessment the parcels were owned by a gas utility. Therefore, the Developer’s estimate of a Base Year Assessed Valuation of $250,000 is used for the purposes of projecting TIF revenue. Based on development plans provided by the Developer, Springsted has estimated the South Project’s total fair market value upon completion in 2014 (assessed January 1, 2015) at $17,042,639, and the total assessed value at $2,229,903. The property tax increment generated in any given year will be determined by the South Project’s increase in Current Assessed Valuation over its Base Year Assessed Valuation (as of January 1, 2013). The Developer is not assuming any taxable sales generated in the North Project Area; however if substantial changes occur, additional unforeseen revenues may be generated.

33

Projected Revenue (Benefits) 7


4. Projected Revenues (Benefits) Tax Increment Revenue Increased Assessed Value The City has the ability to use up to 100% of the property tax increment generated by the Project based on its increase in Current Assessed Valuation over its Base Year Assessed Valuation, as is illustrated below for the Projects at full assessment in 2015.

South Project Projected Total

Fair Market Value

(1/1/2015)

Class/Rate

Projected Total Assessed Value (1/1/2015)

$5,759,147 CU/25.00% 1,439,787 $1,110,895 RES/11.50% 127,753 $9,030,690 EQ/0.0% 0

Original Assessed Value (62,227)

Increased Assessed Value 1,505,313

North Project Projected Total

Fair Market Value

(1/1/2015)

Class/Rate

Projected Total Assessed Value (1/1/2015)

$2,000,000 CU/25.00% 500,000

$15,042,639 RES/11.50% 1,729,903 Original Assessed Value (250,000)

Increased Assessed Value 1,979,903

The Developer estimates that the Total Assessed Value of the Project will increase at approximately 2.0% annually over the life of the Projects. Exhibit II (Assumptions Report) details many of the assumptions used in the projection of values and tax increments for both Projects. Column 4 in Exhibit III (Projected Property and Sales Tax Increment & TDD) shows the projected Increased Assessed Valuation of each Project over its maximum duration. Property Tax Rates In order to determine the amount of tax increment generated by the Projects in any given year, the Increased Assessed Value of the Project must be multiplied by the sum of the tax rates for all TIF-applicable tax authorities for that year.

34



For taxes levied in 2010 and payable in 2010/2011, this total TIF-applicable rate is 103.823 mills. We assume this rate remains fixed through-out the term of the District.

Jurisdiction

TIF Eligible Mill Rate

(2010/2011) City of Lawrence 28.612 Douglas County 35.773 497 Lawrence S/D 39.438

Total 103.823 Projected Property Tax Increment The projected tax increment generated for each of the Projects over a 20-year period is shown in column 10 of Exhibit III (Projected Property and Sales Tax Increment & TDD). If the South project is approved by the City in October, 2012, the Project would be eligible to receive increment in 2014/2015 through the first-half 2032/2033 collection. No public hearing date has been set for the North project, but collections are projected through the first-half 2032/2033 collection. The tax increment projections are based on Base Year assessed valuations, increased assessed valuations, and tax rates as previously discussed. It is assumed in all years of the report that 100% of property taxes are paid when due. The total property tax increments projected for the South Project are $3,389,654; total property tax increments projected for the North Project are $4,430,765. The cumulative amount of property tax increments projected for the entire District is $7,820,419. Projected Sales Tax Increment The South Project is also eligible to receive sales tax generated within the District. The City currently levies a 1.55% sales tax and the County also levies a 1% sales tax. The City intends to collect all City and County sales taxes generated by taxpayers doing business in the South Project area, to pay for redevelopment project costs, including the payment of debt service. The County will need to separately approve the collection of the sales tax revenue for the South Project. The Developer projects initial year annual sales of $5,579,209 from the hotel and commercial uses. Springsted projects that up to 30% of the hotel portion of the sale revenue may be exempt from taxation per Kansas Statute. Therefore, the estimated annual taxable sales are decreased to $5,047,966. Based on a 2.55% applicable sales tax rate (City and County) the stabilized annual sales tax revenue projected is $128,723. The Developer expects total and taxable sales to increase by 2.0% annually for the term of the project resulting in total projected sales tax revenue over the term of the Project of

35



$2,820,622 (see column 9 of Exhibit III – Projected Property and Sales Tax Increment & TDD for further details). The combination of property and sales tax increment projected for the South Project area over the 20-year period starting from approval is estimated to be $6,210,276. The total property and sales tax increment generated for the entire District is $10,641,041. Projected TDD Sales Tax Revenues As stated earlier, the Developer is requesting the establishment of a Transportation Development District, for the South Project Area, which would impose a 1.0% sales tax to defer eligible project costs. The revenue projected from the sales tax is estimated at $1,178,224 over the maximum 22-year collection period. Developer Revenue The Developer will fund the total anticipated cost of the combined private developments of $44,897,960 up front. The expected funding will be comprised of $33,673,469 of private debt and $11,224,491 of equity. City Administration At this time, the City does not anticipate retaining tax increment for administrative and capital expenditures outside of the Project.

36

Projected Expenditures (Costs) 10


5. Projected Expenditures (Costs) Based on current projections, the Developer estimates the total cost for the South Project site improvements are $845,287 and an additional $2,507,472 for the underground parking. The Developer will finance these South Area Project costs of $3,352,759, and request reimbursement from TIF/TDD revenue, including interest expense. The Developer is seeking reimbursement for interest expenses on their financing of this amount, at an interest rate of 5.5%; which equates to an approximate interest expense of $2,058,529. The total projected private expenditures in the South Project area are $5,411,288 including the estimated interest expense. Additionally, the City is anticipating reimbursing project costs incurred in the development of the existing parking garage of $850,000 as well as a $900,000 for the Lawrence Arts Commons. This brings the total project costs to be funded from TIF/TDD revenue in the South Project Area to $7,161,288. The projected total TIF/TDD revenue of $7,388,499 generated in the South Project Area is sufficient to cover this total cost of $7,161,288. The funding of the $850,000 of costs incurred in the development of the existing parking garage, will be required to come from the TDD revenue generated by the South Project Area. The South Project Area TDD revenue projection totals $1,178,224, which will be used first to fund the $850,000 City project cost, with any remaining TDD revenue available for the reimbursement of Developer TDD eligible costs. The City anticipates at a minimum 5% of annual South Project Area TIF revenue will be dedicated to repayment of the $900,000 Lawrence Arts Commons project costs. If South Project Area revenues are received at a greater rate than currently project, the amount of interest expense incurred in reimbursing the Developer will be reduced due to the shorter repayment period. For the purposes of estimating the total increment cost, we have assumed an amortization for the term of the projected revenues at the Developer’s requested interest rate of 5.5%. The Developer estimates the total cost of the North Project site improvements are $800,000 and an additional $2,639,400 for the underground parking. The Developer will finance these North Area Project costs of $3,439,400, and request reimbursement from TIF revenue, including interest expense. The Developer is seeking reimbursement for interest expenses on their financing of this amount, at an interest rate of 5.5%; which equates to an approximate interest expense of $2,111,725. The total projected private expenditures in the North Project Area are $5,551,125 including the estimated interest expense. However, the projected North Area TIF revenue is insufficient to cover this total cost and the Developer will only be reimbursed up to the revenue collected during the statutory term of the Project. There will be no obligation on the part

37

Projected Expenditures (Costs) 11


of the City to contribute any shortfalls required neither to finance the total $3,439,400 construction cost nor to reimburse for interest expenditures. Based on current projections, the City has the ability to expend a maximum of $4,430,765 in North Project Area property and sales tax increment to assist the Project. The Developer has requested the City pledge property tax increment generated from the North Project Area to reimburse them for the total cost of the public infrastructure improvements and construction of the parking garage estimated at a total $3,439,400 cost, plus interest expense. The City proposes to execute a Redevelopment Agreement outlining a pledge of 100% of the property tax increment generated by the North Project Area, up to an amount necessary to reimburse the Developer for $3,439,400 of construction costs, plus interest expense. The pledge will continue until 2033, the North Project Area’s required termination date. Although the City does not anticipate issuing tax increment bonds, if a request is made, the City will not pledge its full faith and credit (general obligation) to the payment of any such tax increment bonds.

38

Conclusions 12


6. Conclusions South Project Area Conclusions The Act requires that the Financial Feasibility Study demonstrate that a Project’s benefits and other available revenues are expected to equal or exceed all Project costs. The project benefits can be described in two forms: a) the amount of total revenues and other contributions received over the 20 year term of the Project; and b) the amount of project costs which can be financed by the revenues received over the applicable term. This second category represents the amount of bonds issued supported by the future revenues plus the other financial contributions. The South Project Area Costs are here defined as the TIF/TDD eligible expenditures budgeted to complete the South Project and are estimated to total $7,161,288, including estimated interest expenditures. As to the total future revenues and other contributions, the available TIF revenues of the South Project through the first-half 2032/2033 collection are expected to be $6,210,276, and the available TDD revenues of the Project through 2035 are expected to be $1,178,224 (combined revenue of $7,388,499). The total South Project Area Costs to be funded are $7,161,288, including interest costs over the statutory period, which the estimated South Project Area TIF/TDD revenues exceed. Given the assumptions and representations of various parties to the process, this feasibility study concludes that the South Area Project benefits, which include projected TIF/TDD revenue are sufficient to pay the South Area Project costs. The Act also requires a determination of the effect the redevelopment project will have on any outstanding bonds supported by local transient guest and local sales and use taxes. The proposed South Area Redevelopment Project does not currently generate any sale or use taxes and therefore the approval of the collection of sales taxes within the Project area does not have any effect on any outstanding obligations.

39

Conclusions 13


North Project Area Conclusions The Act requires that the Financial Feasibility Study demonstrate that a Project’s benefits and other available revenues are expected to equal or exceed all Project costs. The project benefits can be described in two forms: a) the amount of total revenues and other contributions received over the 20 year term of the Project; and b) the amount of project costs which can be financed by the revenues received over the applicable term. This second category represents the amount of bonds issued supported by the future revenues plus the other financial contributions. The North Project Area Costs are here defined as the TIF eligible expenditures budgeted to complete the North Project and are estimated to total $5,551,125, plus interest expenditures. As to the total future revenues and other contributions, the available TIF revenues of the North Project Area through the first-half 2032/2033 collection are expected to be $4,430,765. The Developer is requesting $3,439,400, plus interest over the statutory period. The revenue is sufficient to reimburse the total North Area project costs, exclusive of interest reimbursement. Repayment of the total North Area Project Costs, and the estimated interest reimbursement of $2,111,725, would require a Developer contribution of $1,120,360 to complete the site improvements and parking garage, including financing costs related to debt issued to initially construct the project. Given the assumptions and representations of the various parties to the process, this feasibility study concludes that the North Area Project benefits which include projected TIF revenue and Developer contributions of at least $1,120,360 are sufficient to pay the project costs. The Act also requires a determination of the effect the redevelopment project will have on any outstanding bonds supported by local transient guest and local sales and use taxes. The proposed North Area Redevelopment Project does not currently generate any sale or use taxes and therefore the approval of the collection of sales taxes within the Project area does not have any effect on any outstanding obligations.

40

EXHIBIT I

MAP OF PROPOSED REDEVELOPMENT DISTRICT & PROJECTS

41

Exhibit II TIF District and Redevelopment Project Area Assumptions

42

Exhibit II – Page 1 of 7

City of Lawrence, KansasRedevelopment Tax Increment Financing District

Original Assessed Value (1/1/12) 62,227

TIF 2010/11 Mill Rates Total Applicable

State of Kansas 1.500 0.000Douglas County 35.773 35.773City of Lawrence 28.612 28.612497 Lawrence S/D 27.738 27.738497 Lawrence S/D-Gen 20.000 0.000497 Lawrence S/D-Bond 11.700 11.700

Total 125.323 103.823Assume fixed rate

Property TIF Inflation Rate: 2.00%Sales Tax Inflation Rate: 2.00%

South Project Area

43

Exhibit II - Page 2 of 7


Original Assessed Value (1/1/12) 250,000

TIF 2010/11 Mill Rates Total Applicable

State of Kansas 1.500 0.000Douglas County 35.773 35.773City of Lawrence 28.612 28.612497 Lawrence S/D 27.738 27.738497 Lawrence S/D-Gen 20.000 0.000497 Lawrence S/D-Bond 11.700 11.700

Total 125.323 103.823Assume fixed rate

Property TIF Inflation Rate: 2.00%Sales Tax Inflation Rate: NA

North Project Area

44



South Project Area

Assess 2007

PropertyOwner Address Parcel ID Land Building Total Land Building Total Class

9-10 LLC 900 New Hampshire 023-079-31-0-20-18-002.00-0 518,560 - 518,560 - 62,227 62,227 VUCity of Lawrence 940 New Hampshire 023-079-31-0-20-18-006.01-0 388,580 7,900,940 8,289,520 - - - EQSalvation Army 946 New Hampshire 023-079-31-0-20-18-010.00-0 371,250 369,920 741,170 - - - EQ

Totals 1,278,390 8,270,860 9,549,250 - 62,227 62,227

Estimated Assess 2012 Values 1,278,390 8,270,860 9,549,250 - 62,227 62,227 (Base Year of Redevelopment TIF District) Total Appraised Value Total Assessed Value

2012 Appraised 2012 Assessed

45



North Project Area

Assess 2007

PropertyOwner Address Parcel ID Land Building Total Land Building Total Class

9-10 LLC 100 E 9th Street 023-079-31-0-20-15-006.00-0 1,000,000 - 1,000,000 250,000 - 250,000 CU9-10 LLC 100 E 9th Street 023-079-31-0-20-15-008.00-0

Totals 1,000,000 - 1,000,000 250,000 - 250,000

Estimated Assess 2012 Values 1,000,000 - 1,000,000 250,000 - 250,000 (Base Year of Redevelopment TIF District) Total Appraised Value Total Assessed Value

2012 Appraised 1) 2012 Assessed

1) Market value assumption provided by Developer. Will need to work with County to finalize market value as property is converted from gas utility.

46


Property Tax Increment

Base and Current Values Appraised AssessedBase - Assess January 1, 2012 9,549,250 62,227Est. Base - Assess January 1, 2012 9,549,250 62,227

Assessment Rate: 25.00% 11.50% 25.00% 25.00%

Project Components Hotel Units Apartment Units Retail Uses Parking Uses Total81 rooms 8 units 89

Estimated Square Footage 41,194 7,130 14,131 included in 62,455Estimated Appraised Value per Unit/SF 1) $49,383 $138,862 $124 NATotal Appraised Value 4,000,000 1,110,895 1,759,147 included in 6,870,042Total Assessed Value 1,000,000 127,753 439,787 included in 1,567,540

New Development Appraised Hotel Units Apartment Units Retail Uses Parking UsesJanuary 1, 2013 0% 0% 0% NAJanuary 1, 2014 85% 85% 85% NAJanuary 1, 2015 100% 100% 100% NA

TotalEstimated Appraised Value Hotel Units Apartment Units Retail Uses Parking Uses AppraisedJanuary 1, 2013 0 0 0 included in 0January 1, 2014 3,400,000 944,261 1,495,275 included in 5,839,536January 1, 2015 4,000,000 1,110,895 1,759,147 included in 6,870,042

TotalEstimated Assessed Value Hotel Units Apartment Units Retail Uses Parking Uses AssessedJanuary 1, 2013 0 0 0 included in 0January 1, 2014 850,000 108,590 373,819 included in 1,332,409January 1, 2015 1,000,000 127,753 439,787 included in 1,567,540

Tax Increment Total Original CapturedAssessed Assessed Assessed

Assess 2013/Distrib 2014 62,227 62,227 0Assess 2014/Distrib 2015 1,332,409 62,227 1,270,182Assess 2015/Distrib 2016 1,567,540 62,227 1,505,313

NOTES:

1) For estimating the hotel value we used the Developer's assumption of $4,000,000. For the apartment and retail uses we have estimated the value based on cap rates 7.0% and 7.5% respectively.


South Project Area

47

Exhibit II - Page 6of 7

Property Tax Increment

Base and Current Values Appraised AssessedBase - Assess January 1, 2012 1,000,000 250,000Est. Base - Assess January 1, 2012 1,000,000 250,000

Assessment Rate: 11.50% 25.00%

Project Components Apartment Units Commercial Uses Parking Uses Total114 units 114

Estimated Square Footage 106,500 22,500 included in 129,000Estimated Appraised Value per Unit/SF 1) $131,953 $89 NATotal Appraised Value 15,042,639 2,000,000 included in 17,042,639Total Assessed Value 1,729,903 500,000 included in 2,229,903

New Development Appraised 2)Apartment Units Commercial Uses Parking Uses

January 1, 2013 0% 0% NAJanuary 1, 2014 50% 50% NAJanuary 1, 2015 100% 100% NA

TotalEstimated Appraised Value Apartment Units Commercial Uses Parking Uses AppraisedJanuary 1, 2013 0 0 included in 0January 1, 2014 7,521,320 1,000,000 included in 8,521,320January 1, 2015 15,042,639 2,000,000 included in 17,042,639

TotalEstimated Assessed Value Apartment Units Commercial Uses Parking Uses AssessedJanuary 1, 2013 0 0 included in 0January 1, 2014 864,952 250,000 included in 1,114,952January 1, 2015 1,729,903 500,000 included in 2,229,903

Tax Increment Total Original CapturedAssessed Assessed Assessed

Assess 2013/Distrib 2014 250,000 250,000 0Assess 2014/Distrib 2015 1,114,952 250,000 864,952Assess 2015/Distrib 2016 2,229,903 250,000 1,979,903

NOTES:

2) Assumes project construction begins in 2013, with 50% constructed in 2013, and remaining portion completed in 2014. This assumption should be discussed further.

1) For estimating the hotel value we used the Developer's assumption of $2,000,000 for the bank portion, and a 7.5% cap rate for the remaining commercial portion. For the apartment we have estimated the value based on a cap rate of 7.0%.


North Project Area

48

Exhibit II - Page 7 of 7 City of Lawrence, Kansas

Redevelopment Tax Increment Financing DistrictSouth Project Area

Sales Tax Assumptions for Sales Tax Increment and Transportation Development District (TDD) Sales Tax

Sales Tax RatesBase Information City of Lawrence 1.55%Existing Project Sales Taxes: NA Douglas County 1.00%

Total TIF Sales Tax 2.55%TDD 1.00%

Project InformationHotel Units Apartment Units Retail Uses Parking Uses Total

Estimated Annual Sales: 1) 1,770,809 NA 3,808,400 inc. in hotel 5,579,209

Locally Taxable Portion of Retail Sales: 2) 70.00% NA 100.00% inc. in hotel

Estimated Taxable Sales: 1,239,566 NA 3,808,400 inc. in hotel 5,047,966

Estimated TIF Sales Tax Rate: 3) 2.55% NA 2.55% inc. in hotel

Estimated TDD Sales Tax Rate: 1.00% NA 1.00% inc. in hotel

Estimated Annual TIF Sales Tax Collections: 31,609 NA 97,114 inc. in hotel 128,723(at stabilized occupancy and sales)

Estimated Annual TDD Revenues: 17,708 NA 38,084 inc. in hotel 55,792(at stabilized occupancy and sales)

Sales Tax Collections: Estimated % Estimated TIF TDDof Total Taxable Sales Sales Tax Sales Tax

Taxes collected in 2013 0.00% 0 0 0Taxes collected in 2014 3) 50.00% 2,523,983 64,362 27,896Taxes collected in 2015 100.00% 5,047,966 128,723 55,792Taxes collected in 2016 100.00% 5,047,966 128,723 55,792

NOTES:

1) We have used the numbers presented by the Developer for total revenue from sales.

3) We have assumed that the sales revenue is only 50% in the first year.

2) We have assumed that only 70% of the hotel sales will be taxable because of the targeted audience of University/College entities which are exempt from sales tax if paid for by the University/College. This topic needs further discussion.

49

EXHIBIT III

PROJECTED PROPERTY TAX AND SALES TAX INCREMENT & TDD

50


South Project AreaProjected Property Tax and Sales Tax Increment & TDD

(3) - (4) 100%

Assess & Original TIF Increased Projected Projected Projected Projected ProjectedTIF Tax Levy Tax Distrib. Total Assessed Assessed Property Tax Taxable Sales Tax Total TDD

Year Year Year Assessed (a) Value Value Increment (b) Sales (c) Increment (d) Increment Revenue (e)(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)0 2012 2013 62,227 62,227 0 0 01 2013 2014 62,227 62,227 0 0 0 0 0 02 2014 2015 1,332,409 62,227 1,270,182 131,874 2,523,983 64,362 196,236 25,2403 2015 2016 1,567,540 62,227 1,505,313 156,286 5,047,966 128,723 285,009 50,4804 2016 2017 1,598,890 62,227 1,536,663 159,541 5,148,926 131,298 290,839 51,4895 2017 2018 1,630,868 62,227 1,568,641 162,861 5,251,904 133,924 296,785 52,5196 2018 2019 1,663,486 62,227 1,601,259 166,247 5,356,942 136,602 302,850 53,5697 2019 2020 1,696,755 62,227 1,634,528 169,702 5,464,081 139,334 309,036 54,6418 2020 2021 1,730,690 62,227 1,668,463 173,225 5,573,363 142,121 315,346 55,7349 2021 2022 1,765,304 62,227 1,703,077 176,819 5,684,830 144,963 321,782 56,848

10 2022 2023 1,800,610 62,227 1,738,383 180,484 5,798,527 147,862 328,347 57,98511 2023 2024 1,836,623 62,227 1,774,396 184,223 5,914,497 150,820 335,043 59,14512 2024 2025 1,873,355 62,227 1,811,128 188,037 6,032,787 153,836 341,873 60,32813 2025 2026 1,910,822 62,227 1,848,595 191,927 6,153,443 156,913 348,839 61,53414 2026 2027 1,949,039 62,227 1,886,812 195,894 6,276,512 160,051 355,945 62,76515 2027 2028 1,988,019 62,227 1,925,792 199,942 6,402,042 163,252 363,194 64,02016 2028 2029 2,027,780 62,227 1,965,553 204,070 6,530,083 166,517 370,587 65,30117 2029 2030 2,068,335 62,227 2,006,108 208,280 6,660,684 169,847 378,128 66,60718 2030 2031 2,109,702 62,227 2,047,475 212,575 6,793,898 173,244 385,819 67,93919 2031 2032 2,151,896 62,227 2,089,669 216,956 6,929,776 176,709 393,665 69,29820 2032 2033 2,194,934 62,227 2,132,707 110,712 7,068,371 180,243 290,955 70,68421 2033 2034 2,238,833 2,238,833 0 0 7,209,739 0 0 72,09722 2034 2035 2,283,609 2,283,609 0 0 7,353,934 0 0 55,155

Totals $3,389,654 $2,820,622 $6,210,276 $1,178,224Total Revenue: 7,388,499

(a) Assumes 900 New Hampshrie TIF Project value will be assessed according to completion schedule on previous page, with inflation commencing in Levy Year 2016

(b) Assumes 100% collection of property taxes. Since TIF expenditures are limited to 20 years from City approval of Project estimated to occur October 2012, final collection would be first-half 2032 collection,

distributed to City in January 2033. Assume 2010/2011 Mill Levy Rate held flat.

(c) Assumes 50% of sales are taxable in first year.

(d) Since TIF expenditures are limited to 20 years from City approval of Project estimated to occur in October 2012, revenue in assess 2032/pay 2033 is the first 9 months.

(e) Assumes collection of TDD sales tax revenue for maximum term allowed, with note issued in 2013, would mature 22 years later in 2034 (assume first six months of revenue in 2034)

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North Project AreaProjected Property Tax and Sales Tax Increment & TDD

(3) - (4)

Assess & Original TIF Increased Projected Projected Projected ProjectedTIF Tax Levy Tax Distrib. Total Assessed Assessed Property Tax Taxable Sales Tax Total

Year Year Year Assessed (a) Value Value Increment (b) Sales (c) Increment Increment(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)0 2012 2013 250,000 250,000 0 0 01 2013 2014 250,000 250,000 0 0 0 0 02 2014 2015 1,114,952 250,000 864,952 89,802 0 0 89,8023 2015 2016 2,229,903 250,000 1,979,903 205,560 0 0 205,5604 2016 2017 2,274,502 250,000 2,024,502 210,190 0 0 210,1905 2017 2018 2,319,992 250,000 2,069,992 214,913 0 0 214,9136 2018 2019 2,366,391 250,000 2,116,391 219,730 0 0 219,7307 2019 2020 2,413,719 250,000 2,163,719 224,644 0 0 224,6448 2020 2021 2,461,994 250,000 2,211,994 229,656 0 0 229,6569 2021 2022 2,511,234 250,000 2,261,234 234,768 0 0 234,768

10 2022 2023 2,561,458 250,000 2,311,458 239,983 0 0 239,98311 2023 2024 2,612,687 250,000 2,362,687 245,301 0 0 245,30112 2024 2025 2,664,941 250,000 2,414,941 250,726 0 0 250,72613 2025 2026 2,718,240 250,000 2,468,240 256,260 0 0 256,26014 2026 2027 2,772,605 250,000 2,522,605 261,904 0 0 261,90415 2027 2028 2,828,057 250,000 2,578,057 267,662 0 0 267,66216 2028 2029 2,884,618 250,000 2,634,618 273,534 0 0 273,53417 2029 2030 2,942,310 250,000 2,692,310 279,524 0 0 279,52418 2030 2031 3,001,156 250,000 2,751,156 285,633 0 0 285,63319 2031 2032 3,061,180 250,000 2,811,180 291,865 0 0 291,86520 2032 2033 3,122,403 250,000 2,872,403 149,111 0 0 149,111

Totals $4,430,765 $0 $4,430,765

(a) Assumes North TIF Project value will be assessed according to completion schedule on previous page, with inflation commencing in Levy Year 2016

(c) Assumes no sales generated by development

(b) Assumes 100% collection of property taxes. Since TIF expenditures are limited to 20 years from City approval of Project estimated to occur ____, 2012, final collection would be first-half 2032 collection, distributed to City in January 2033. Assume 2010/2011 Mill Levy Rate held flat.

52

53

dstoddard

Typewritten Text

Exhibit I

MEMORANDUM

TO: Diane Stoddard, Assistant City Manager

Britt Crum-Cano, Economic Development Coordinator

FROM: Tony Schertler, Senior Vice-President

Tom Denaway, Analyst

DATE: September 26, 2012

SUBJECT: 900 New Hampshire Project – Addendum to Project Feasibility Analysis

At the request of the City, Springsted reviewed updated TIF and TDD projections for the 900 New Hampshire project

in order to verify that the project continues to satisfy the Financial Feasibility requirement. The Developer of the

project has provided an updated project plan with a number of revisions to the proposed composition of the building.

Originally, the proposed development was to include 81 hotel rooms, 11 apartment buildings, first floor retail space

and lobby, and a rooftop restaurant and pool area. The revised build-out of the project does not contemplate a

change to the project footprint or scope, but assumes a slightly different composition of building components.

The proposed project changes:

Elimination of rooftop restaurant and pool area; replaced with three condominium units on top floor

Elimination of projected rental apartments; replaced with 11 additional hotel rooms bringing total project to

92-hotel rooms

Conversion of approximately 350 square feet of first floor lobby space to retail use, and the inclusion of a

first floor pool area

The change in the project composition will result in differing TIF and TDD revenues from those originally published in

the Redevelopment Project Feasibility Study dated June 27, 2012. The Financial Feasibility Study must show that a)

the Project’s benefits, tax increment revenue, and other available revenues under K.S.A. 12-1774(a)(1) are expected

to exceed or be sufficient to pay for all Project costs as defined by K.S.A. 12-1773, including the payment of principal

and interest of debt used to finance the redevelopment project; and b) the effect, if any, the redevelopment project

costs will have on any outstanding special obligation bonds payable from the revenues described in K.S.A. 12-

1774(a)(1)(D).

Springsted Incorporated

380 Jackson Street, Suite 300

Saint Paul, MN 55101-2887

Tel: 651-223-3000

Fax: 651-223-3002

www.springsted.com

58

dstoddard

Typewritten Text

Exhibit J

City of Lawrence, Kansas September 26, 2012 Page 2

In reviewing the updated projections prepared by the Developer, Springsted has determined that the project changes

will likely have a minimal impact on the overall feasibility of the project.

Based on the Developer’s projections, the revised project should result in increased property tax increment of $4,906

annually, offset by decreased annual sales tax increment of $15,713 and $6,162 in annual TDD revenue. Overall,

the adjusted project is expected to result in an annual decrease in total TIF and TDD revenue of $16,969. This is an

approximately 5% decrease from the stabilized annual revenue projected in the original Feasibility Study.

Overall, the projected TIF and TDD revenue will be reduced by the project alterations largely due to the decrease in

taxable sales due to the elimination of the restaurant. In the event that actual project revenues are lower than the

actual project costs funded, the difference will be made up by the Developer either through: the contribution of

additional funds to fill the gap, or a reduction in the amount of interest reimbursement paid on the Developer’s pay as

you go note. Therefore, in consultation with the City’s Bond Counsel, it is our belief that the revised project scope will

not adversely affect project feasibility due to scale of the decrease in revenues and the additional remedies outlined

above.

Additionally, as a result of the changes, an increase in non-TIF captured Transient Guest Tax (TGT) will be

generated by the project, in comparison to the original projections. However, this is a non-TIF captured revenue

source and therefore does not impact project feasibility.

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